The case concerned the UK Government’s approval of UK Export Finance’s (“UKEF”) $1.15 billion investment in a liquified natural gas project in Mozambique. UKEF is the Government’s export credit agency and its aim is to ensure that no viable UK export fails for lack of finance or insurance from the private sector.
The challenge came from Friends of the Earth (“FoE”) who, in the main, argued that the Government’s decision to approve the project was at odds with its duties under the Paris Agreement, in particular article 2(1)(c), and was therefore unlawful. The principal, and first, obstacle FoE faced was to persuade the court to make a ruling on the correct interpretation of the Paris Agreement. The Government argued that owing to the Paris Agreement being an unincorporated international treaty, the court should not rule on the interpretation as it usually would on domestic legislation. Rather the court should constrain its examination to whether the Government’s interpretation had been “tenable”.
Standard of inquiry by the court
The court sided with the Government’s submissions for several reasons. Firstly, it is a fundamental constitutional principle of our legal system that only international treaties incorporated through domestic legislation give rise to legally enforceable rights. Potentially the most famous example is the European Convention on Human Rights which is given effect by the Human Rights Act 1998. The Paris Agreement has not been incorporated and so whilst the Government chose to take its obligations under the Agreement into account, it was not compelled to. Secondly, binding precedent – primarily found in the House of Lord’s decision in R (Corner House Research) v Serious Fraud Office  UKHL 60 – indicated the “tenable” approach was correct. Lord Brown at paragraph 65 of Corner House said, “[for] a national court itself to assume the role of determining such a question [of disputed international law] … would be a remarkable thing, not to be countenanced save for compelling reasons”. Thirdly, there is a lack of clear guidance as to how unincorporated treaties should be construed as a matter of domestic law and so this case could be distinguished from authorities that FoE relied on. Fourthly, it may deter decision-makers from seeking to give effect to international obligations of the UK for fear that those decisions will be quashed on the ground that their interpretation was wrong. This, the court held, would clearly be problematic and unworkable.
Therefore, the court concluded (at paragraph 40(v)) that “provided it was tenable for UKEF to reach the view that funding the project was aligned with the UK’s obligations under the Paris Agreement, the court could not and should not hold that it had made an error of law”.
The Government’s view was tenable
FoE submitted that the decision to approve the project was irrational because post-decision the Government had acknowledged in a series of policies that the project did not align with the UK’s obligation under the Paris Agreement. The court held, again, that the only relevant question was whether the Government’s view that the funding decision aligned with the UK’s obligations under the Paris Agreement was a tenable one when it was taken – not with the benefit of hindsight. The court acknowledged that the decision was an incredibly complex one, awash with a myriad of uncertainties including the project’s Scope 3 emissions. Despite the complexity of the issue there was positive support for the decision, including a detailed analysis from UKEF and also from instructed consultants who acknowledged the project could displace the need for coal power and therefore “potentially reduce emissions”. Having regard to this support and the sheer complexity of the issue the court concluded that the Government’s decision was indeed tenable (paragraph 55(v)).
The final issue that arose was a challenge under the Tameside principle – that a public body has a duty to carry out a sufficient inquiry prior to making its decision (Secretary of State for Education and Science v Metropolitan Borough of Tameside  3 All ER 665). FoE claimed that the Government breached this duty when it failed to obtain a proper quantification of the project’s Scope 3 emissions; it also being said that the figures that they had acquired were insufficient. The court considered the quantification of Scope 3 emissions available to the decision-makers was “well within the substantial margin of appreciation” afforded to them and therefore the Tameside duty had not be breached (paragraph 63). Several reasons were given for this conclusion.
Firstly, Thornton J. (who had sided with FoE on this issue in the court below) had been wrong to conclude the failure to quantify Scope 3 emissions meant there was no rational basis for holding the decision was consistent with article 2(1)(c) of the Paris Agreement. This is because article 2(1)(c) is an aim of the Agreement, rather than an obligation with which compliance must be demonstrated. Secondly, UKEF were entitled to consider climate change risks without having to do so mathematically, particularly when the evidence demonstrated a wide range of considerations had been taken into account. Thirdly, the project was going to commence regardless of whether UKEF contributed to the financing and so the decision to contribute could not have reduced or avoided the emissions in any event. Fourthly, quantification of Scope 3 emissions did not answer the more pertinent question of whether the project would replace more polluting fossil fuels. Ultimately, the court held, a failure to make an estimate of Scope 3 emissions (which by their nature is uncertain) does not render a multifaceted decision-making process irrational.
The judgment can be found here
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